Banking: Who’s Afraid of The Big Blank Check?

The “universal” check, along with its subspecies the “counter” check, remains a staunch standby of Americans who find themselves out of modern, magnetically coded personal checks, credit cards or even old-fashioned cash. But in an age when 44 million checks are cashed and processed daily by speedy check-reading machines, the uncoded universal kind is about as handy as wampum—and the Federal Reserve System would like to see it go the same way.

Hoping to stamp out uncoded checks of all sorts, which account for a troublesome 2% of its daily traffic, the Fed has relegated them to a sort of second-rate status. Unlike coded checks, which are processed in a day or two, an uncoded check submitted to one of the Fed’s twelve regional banks might be shuffled for ten days or more.

The Fed’s idea is simply to pressure banks into refusing to accept uncoded checks as too slow and costly to collect. So far, the only notable effect has been some informal choosing of sides over the whole question of uncoded checks. Out in Las Vegas, Caesar’s Palace was quick to announce that casino customers were welcome to use them as usual. On the other hand, saloon keepers and merchants, who often find that a universal check is made of rubber, are just as eager to stretch the law. “Sorry,” cashiers at an A. & P. store in Atlanta told check-seeking customers, “they’re illegal now.”

Some banks have been trying to discourage use of uncoded checks for the past year or two. When the money is coming in, however, most banks are still happy to take it any way it comes. Declared an officer of Atlanta’s Citizens & Southern National Bank: “A check can be written on a door or a piece of cardboard or carved in stone. We’ll still accept it.”